It’s shaping up to be one of the key issues of the looming federal election — but many Aussies are still unsure about what negative gearing really means for them.

While a Morrison government would leave things as they are, Labor has pledged to upset the apple cart in order to “help housing affordability” by reforming negative gearing and capital gains tax arrangements.

That means if Bill Shorten wins on May 18, negative gearing will be limited to newly built properties, with Labor also planning to half the 50 per cent capital gains tax discount in a bid to help Aussies buy homes.

According to Ms Conisbee, the ALP policy would be “bad news for ‘mum and dad’ investors”, especially people hoping to snap up an investment property for the first time.

That’s because from January 1, only new properties will be able to be negatively geared — but many investors opt for established homes over new ones.

However, those who already have large portfolios under their belts could benefit — Ms Conisbee claims rising rental levels mean those Aussies could end up seeing a higher return on their investment.

RENTERS

Ms Conisbee argues the changes could lead to fewer property investors in the market — meaning the total number of available rental properties “will drop under the ALP” — meaning rents will increase.

“ … given renters tend to be younger, poorer and more likely in housing stress, even small increases can be problematic,” she wrote, claiming that over time, rental properties could also end up being concentrated in new housing areas.

That means signing a lease in a “middle ring” area could become more of a challenge.

An ALP win could be good news for developers and first home buyers. Picture: iStockSource:istock

FIRST HOME BUYERS

Of course, the big winners of the potential change would be our beleaguered first home buyers.

“First home buyers and investors tend to target similar sorts of properties in similar locations,” Ms Conisbee claims.

“A slow market also appears to make them more active, perhaps because it gives them more time to make decisions.”

As a result, those possible changes would be a helping hand for those dreaming of home ownership.

UPGRADERS AND DOWNSIZERS

Ms Conisbee said that “price falls aren’t particularly bad for upgraders and downsizers” — meaning that while their current home might fetch a lower price, they’ll also manage to score their new property for more of a bargain, meaning that this demographic won’t be overly affected by any changes.

DEVELOPERS

Another big winner of the ALP plan would be developers, as the policy has been created to encourage new building.

If investors make the jump from existing to new dwellings, then it will be “good news” for them, Ms Conisbee claims.